Page 72 - Account 10

5. It is the banker of the banks and 5. They are the bankers of individuals and
government. organizations.

6. It manages foreign currency by fixing 6. They exchange foreign currency only.
the exchange rate.
7. There is only one central bank in a 7. They exchange with many commercial banks
country. in a country.
8. It is established under the special 8. They are established under the certain
Central Bank Act. Commercial Bank Act.
9. It grants loans to the government and 9. It grants loans to the individuals and
commercial banks. organizations.

Development Bank

11. Introduction

A development bank is the one, which is established under a special Act for the
upliftment of a certain economic sector by providing special financial, technical and
administrative assistance under simple and easy terms and condition. Such a bank is
established as the important aspect of national economy, mostly in industrial and
agricultural sectors. In Nepal, development banks are established under the provision of
Development Bank Act, 2052 A.D.
Nepal Industrial Development Corporation (NIDC: 2016 B.S.) and other private
development banks have already been established in Nepal under this Act.
Development bank provides short term, mid term and long term loan to the industries and
it provides capital, technical assistance, managerial and administrative suggestions to the
development of industrial, agricultural, rural and other specific sectors of the country. It
also creates proper environment in the country for the development of concerned sectors.
The first development bank of world was ‘Societe Generale de Beljique’, Belgium
1822 A.D.
According to Bank and Financial Institutions ACT, 2063 BS, development banks in
Nepal fall under class ‘B’ financial institutions, which perform their activities for the
development of specific sectors.
According to D.M. Mithani, “A development may be defined financial institution concerned
with providing all types of financial assistance (medium as well as long term) to business units, in
the form of loans, under writing, investment and guarantee operation and development in general
and industrial.”
From the above definitions, it can be concluded that it is a financial institution which
is established for the development of special sectors like, industry, transportation,
agriculture, commerce, etc.
The requirement for national-level development banks is Rs 2.5 billion, development
banks working in four to 10 districts should have paid-up capital of Rs 1.2 billion, and

72 Aakar’s Office Practice and Accountancy - 10 Financial Institutions 73